611.6131/322: Telegram

The Secretary of State to the Ambassador in the Soviet Union (Bullitt)

144. Your 264, July 4, 4 p.m.

While statement of Soviet Economic Adviser is not clear, Department believes that he refers to the proviso which was in paragraph 1650, dealing with coal of the Tariff Act31 to the effect that “if any country … imposes a duty on any article specified in this paragraph, when imported from the United States, an equal duty shall be imposed upon such article coming into the United States from such country”. This proviso was repealed by the Trade Agreements Act of June 12, 1934, and since that date, of course, no duties have been collected under that proviso.
The only charge now levied specifically on importations of coal is the tax imposed under Section 601 (c) (5) of the Revenue Act of 1932, as amended, in the case of coal imported from a country which exports more coal, coke and briquettes to the United States than it imports from the United States and which does not have a most-favored-nation treaty with the United States.
Canada is exempt from the tax under Section 601 (c) (5) because it imports more coal and coke from the United States than it exports to the United States. Great Britain, Belgium, and certain other countries are exempt from the tax on coal or coke through the operation of the most-favored-nation clause contained in treaties, between the United States and those countries. As stated in second paragraph of section 2 of Department’s 111 May 27, 6 p.m., coal from the Soviet Union is not exempt from this tax and for reasons there set forth exemption cannot be obtained through the operation of the most-favored-nation clause in an executive agreement of the kind under consideration. The Revenue Act in question provides for the imposition of the tax “unless treaty provisions of the United States otherwise provide.”
The Department assumes that you intended to quote the first sentence in second paragraph Department’s 81 April 22, 8 p.m., rather than the second sentence quoted in first paragraph of your telegram. Since the Soviet Economic Adviser’s objection is based on a misunderstanding, no change in the wording of the second paragraph Department’s 81 April 22 is necessary.
  1. Tariff Act of 1930, approved June 17, 1930; 46 Stat. 590, 676.